‘After you’ dance on ‘fiscal cliff’ deadline

Senate back, House returning, parties call on other side to budge

House Republican leaders said Thursday that they will bring their chamber back to town this weekend to try to avert the “fiscal cliff” — the sole optimistic sign on a day when pessimism deepened within both parties on whether Congress can avoid the looming tax increases and automatic spending cuts.

Neither side offered a realistic path forward, with Republicans saying that they are waiting on President Obama to send over a scaled-down proposal for review and the White House telling reporters he has no plans to do so.

Late in the day, Mr. Obama invited top leaders to come to the White House on Friday for a meeting, though even that didn’t appear to signal any break in the gridlock that has pervaded for the past two months.

Without a deal, tax rates will increase across the board on Tuesday, followed a day later by $110 billion in automatic spending cuts.

“It looks like that’s where we’re headed,” Senate Majority Leader Harry Reid, Nevada Democrat, said in opening the Senate session, adding that he doesn’t see how any plan could be brought up in his chamber in time to beat the deadline.

Consumer confidence has nose-dived as chances for a deal have dimmed, the Conference Board said Thursday.

Stock markets fell on the news, though they rebounded somewhat by the end of the day.

Progress on Capitol Hill was measured by rumors of proposals and meetings, which neither side would confirm until late in the day.

It was an indicator of just how sensitive negotiations were after conservatives last week scuttled a “Plan B” approach to raise taxes on millionaires, proposed by House Speaker John A. Boehner, Ohio Republican.

After Mr. Boehner’s failure, he said it was up to Mr. Reid and Mr. Obama to write a bill that could win bipartisan support. Sen. Mitch McConnell of Kentucky, the top Republican in the upper house, also said the onus is on Democrats to put something on the floor of the Senate and see whether they can pass it.

“It appears to me the action, if there is any, is now on the Senate side,” Mr. McConnell said.

Mr. Obama cut short his Christmas vacation in Hawaii and returned to Washington on Thursday to be ready to negotiate. Senators returned from a five-day break to debate an intelligence bill and an emergency spending bill for Superstorm Sandy repairs, but it had no action scheduled on the fiscal cliff.

As for Friday’s meeting, the White House made the announcement in a terse statement, and immediate reactions from spokesmen for Mr. McConnell and Mr. Boehner reiterated previous stances.

The statement from Mr. Boehner’s office said the speaker would attend while noting that “the House has already passed legislation to avert the entire fiscal cliff and now the Senate must act.”

It has been more than a week since either side has engaged in real negotiations. Mr. Obama had bumped up his threshold for tax-rate increases from $250,000 to $400,000 and had agreed to change the formula for calculating cost-of-living increases for Social Security. Mr. Boehner proposed $1 trillion in new taxes from a mixture of increasing rates and eliminating deductions, but he wanted deeper spending cuts in exchange.

He also said Mr. Obama would have to forgo his demands for tens of billions of dollars in new stimulus spending, including an extension of unemployment benefits.

When he left for Hawaii, Mr. Obama hoped that all sides would “cool off” over Christmas, but those hopes were dashed.

Mr. Boehner on Wednesday reiterated his demand that the Senate act next, and Mr. Reid opened the Senate on Thursday by mocking Mr. Boehner for giving the House the week off.

“He shouldn’t have let them go,” the Nevada Democrat said. “John Boehner seems to care more about keeping his speakership than keeping the nation on a firm financial footing.”

House Minority Whip Steny H. Hoyer, Maryland Democrat, also pleaded for the House to return, taking to a near-empty chamber to wonder where everyone was.

“Some of us are here in this chamber today, but very frankly, all of us ought to be here in this chamber today,” said Mr. Hoyer, surrounded by two of his Democratic colleagues. Only one Republican, Rep. Steven C. LaTourette of Ohio, was in the chamber, as the presiding officer.

For the past six days, Mr. Reid and Mr. Boehner have stared at each other from afar, each asking the other to take the next step.

Mr. Boehner said his chamber passed two other bills earlier this year to head off the tax increases and told the Senate to act on those.

Mr. Reid said the Senate has defeated those, and instead pointed to a bill the Senate passed that would extend tax cuts on families making $250,000 or less but let tax rates rise on others. That bill, however, originated in the Senate, in violation of the Constitution, which requires all revenue measures to start in the House.

Mr. Boehner blinked first Thursday in deciding to call the House into session beginning Sunday night, with less than 30 hours to go before the tax increases take effect.

Taken together, the tax increases and spending cuts likely would plunge the economy into a short, sharp recession, though the Congressional Budget Office says in the long run they will leave a better economy and dramatically improve the federal government’s balance sheet.

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